Georgia Republicans Push to Limit Lawsuits, But Will It Control Insurance Rates?

Georgia Republicans, led by Governor Brian Kemp, are advocating for lawsuit limits to halt rising insurance costs. However, the effectiveness of such measures in controlling insurance rates remains uncertain, as evidenced by mixed results in other states and the influence of various factors on insurance markets.

The Argument for Tort Reform

Governor Kemp argues that unfair lawsuits and excessive jury awards are driving up insurance costs for businesses and consumers. He believes that limiting lawsuits will halt these rising costs and create more jobs. For instance, he mentioned that business owners in high-crime areas are struggling to find insurance due to lawsuits (King, Georgia Insurance Commissioner).



Mixed Evidence on Tort Reform Impact

While some researchers suggest that tort reform could reduce liability insurance costs for businesses and commercial property owners, the evidence is mixed on whether it would significantly lower car insurance and other types of insurance premiums. Tyler Leverty, a business professor at the University of Wisconsin-Madison, argues that tort reform primarily benefits insurers' profitability rather than cutting policy prices (Leverty).

Other Factors Influencing Insurance Rates

Insurance rates are influenced by various factors besides lawsuits, such as inflation, extreme weather, and the costs of labor and materials. It is normal for insurance markets to cycle through tough years where less coverage is offered as rates rise. In many lines of coverage, including those not heavily impacted by lawsuits, insurers in Georgia were less profitable in 2022 compared to several other states (National Association of Insurance Commissioners).

Georgia's Insurance Market Fluctuations

Over a longer period, Georgia's insurance market fluctuations are not abnormal. However, King's report using mostly auto insurance data shows that the number of claims and the size of resulting payments have risen over the years, especially those involving lawsuits. A greater percentage of legal claims are also resulting in payments that hit the maximum dollar amount a policy covers (King's report).

Disputes Over Tort Reform Impact

The Georgia Trial Lawyers Association disputes King's conclusions and argues that the number of claims is in line with Georgia's high number of car accidents. Both claims and payouts have mostly been stable or falling, especially when adjusted for population growth and inflation (David Stegall, risk consultant). Adam Willis, president of trucking firm F&W Transportation, also mentioned that his company's premiums have doubled over the last 10 years while fewer insurers offer full coverage, suggesting that tort reform might not be the sole factor driving insurance rate increases.

Potential Trade-offs

Defenders of the current system argue that the trade-offs of lawsuit limits are a bad deal. They believe that limiting consumer rights will not necessarily lower insurance costs and may instead lead to other negative consequences (Joanne Doroshow, Center for Justice & Democracy at New York Law School).

In conclusion, while tort reform could potentially reduce liability insurance costs for businesses and commercial property owners, its impact on car insurance and other types of insurance premiums is less clear. Other factors, such as inflation and extreme weather, also play a significant role in determining insurance rates. The relationship between Georgia's insurance market dynamics and the potential impact of tort reform on insurance rates is complex and multifaceted, with mixed evidence and differing opinions from various stakeholders.